Senior members of the Institute of Chartered Accountants of India on Wednesday said the accountancy boards of developed countries were likely to follow the United States in retaliating against the Indian chartered accountants if foreign accounting firms were excluded from the Indian market.

Protectionist measures may be expected from markets, which currently welcome Indian professionals, like Europe, West Asia and North Africa. 

In June, the National Association of State Boards of Accountancy of the US wrote to the ICAI, warning that it would stop its efforts to facilitate market access to Indian enterprises and professionals in the US market if market access was denied in India.

In a parallel development, three former presidents of the ICAI said in a joint communication that protectionism would only help the foreign firms.

In an article, co-authors Pesi Narielvala, Prasanta Mallik and Salil Gupta quoted the report of the ICAI's competition policy committee that regulations on the use of firm names did not protect the interest of consumers.

"There are occasions when an audit report is required to be given under the name of an internationally-recognised firm. By preventing a local firm from acting in an international name, we are encouraging the entry of foreign firms rather than denying an opportunity to them," they said.

"If a client cannot obtain such certification from a local firm, which acts on an acceptable foreign name, he will invite a foreign firm to render the services and issue the report, because he is not going to give up his right to a service which he requires in order to comply with our outmoded regulations," they added.

"This is not an idle speculation but is based on actual practice inasmuch as we are aware of cases where a report required for international investment purposes has been obtained from a foreign firm practising in another country which is then forced to visit India for rendering such a service," the co-authors warned in their article.

Narielwala, Mallik and Gupta said foreign firms operated in India through chartered accountants, who had qualified in India and received licences here. Besides, the CPC report had emphasised that local firms should establish international affiliations and relationships.

"A considerable volume of work involving accounting and tax service is now regularly outsourced to India from foreign countries. There is no reason why our members should not have the opportunity to perform this work," they said.

"To deny this right is merely to shift valuable professional work away from our members to other professionals who may render the same service in a corporate form," the co-authors said.